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Wednesday, November 28, 2012

STOCK RALLY - IS IT OVER?

This is not showing very well for some reason. What this is supposed to show is all the markets I was watching quotes on today. You can see at the time the ES is red and virtually every other market on the board was red except Bonds, Notes, the DX and Hogs. The first 3 are all inversely correlated and are flight to safety vehicles. Hogs are not part of the risk on risk off trade that dominates the markets right now. It was certainly no surprise that when the stock market staged that huge reversal today most of these other markets came along for the ride. There is no point in beating a dead horse any more, this is the world we are living in now so just live with it. Make sure you take into account that shorting the ES and shorting Copper or Gold or Crude or the currencies, is basically the same trade. Do not take a full position in all of them because if you do you are raising your risk per trade immensely. I am sure at some point in the future there will be a time when this will go back to normal, but it is going to be a while before that happens.

This is being caused by the Central Banks and they have already told us they intend to keep doing what they are doing for at least 3 more years or more. Hence, this is going to continue so take it into account in position sizing.

I do find it interesting that with the huge reversal the energies still closed down today. I did mention that I had shifted to more of a bearish stance in the energies a few days ago. The oscillator chart I showed in yesterday's post still looks the same. It is showing down movement even with an up close tomorrow. This still tells me there is some underlying weakness here even though the price is not showing it yet. The way the math works on those types of things cycling them back and forth, a double divergence will set up shortly if price keeps moving up. Does this mean you should short this? I am not short the ES and don't plan on shorting it tomorrow even though my short term momentum measures are telling me we should come down in the near term ( the next day or two ).

I think we are now into PPT land again so this is going to be dangerous. That reversal today was a big suspicious to say the least. Boehner essentially agrees to roll over and just let the dems run up the debt more and raise taxes and that causes a rally? Hmmmmm...... We are certainly seeing investigating things leads to anywhere but the truth so what is the point. When you have a criminal investigate himself how many indictments will come from that process? It is no matter I still don't see a sell pattern for entry here regardless of what was behind today's action. Go find someone who does not trade and they can tell you why it happened!

My take for tomorrow is the same as today, I am looking for some near term weakness. If by some outside chance today's low were to be taken out tomorrow that would be very very bearish. That is a huge long shot but I am just pointing that out.

Here is the Silver market at somewhat of an interesting juncture. We have followed the seasonal to an absolute "t" this year. I cannot recall the last time I saw a market follow a seasonal pattern this closely for this long, amazing. In the opposite corner we have the COT setup that could not be more bearish and we have had a trend shift in my bands to down. As a result we have a battle of the bands going on here. What would be ideal is for a dip to occur over the next couple of weeks and have the commercials buy it and everyone else sell it which would flip the COT picture and line it up with the seasonal. I think the stock market will determine whether or not that happens or not since these markets are tied at the hip now. However, this is one to watch.

I put a bullish post title today just so I would knock down the heavy traffic from the search engines my stock crash titles created. I am unsure what to do with the ES right now so I am doing nothing. Today was the largest traffic day I have ever had and that is sad when it was due to just putting a certain negative title in the post to see what happened. Things do look very dark right now but try and see the positives in life. If you look for trouble it will find you.

3 comments:

Anonymous
said...

Hi Chris,

Could you offer some commentary on the Yen? It seems we are in a downtrend this year which is surprising given how long the Yen has been in an uptrend (5+ years). Is it the winds of change blowing in Japan or should we try buying this dip? Any insight is much appreciated.

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